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NEW DELHI : Reliance Industries Ltd, of billionaire Mukesh Ambani, has completed the split of the company’s petroleum-chemicals business into a new unit that will help it pursue growth opportunities through strategic partnerships, the company said.
The Oil-Chemical (O2C) business unit owns Reliance’s petroleum and petrochemical refining assets, as well as the fuel retail operations, but not the upstream oil and gas production fields such as KG-D6 and textile activities.
Reliance first reported integrated earnings from O2C business in its third quarter financial results. Previously, refining and petrochemicals activities were reported separately, while fuel retail revenues were part of the company’s overall retail activities.
In the October-December 2020 earnings report, the revenues of the refining and petrochemical companies as well as the fuel retailing were reported as one. As a result, it did not provide refining margins – the most sought-after number to assess the company’s oil refining business.
“The reorganization of refining and petrochemicals as oil to chemicals (O2C) reflects a new strategy as well as a new management matrix,” the company said in a post-gain investor presentation.
This, he said, “will facilitate holistic and agile decision making” and “seek attractive growth opportunities with strategic partnerships.”
Reliance began work on splitting the O2C business into a separate unit last year with a view to a possible sale of stake to companies such as Saudi Aramco.
It values O2C’s business at $ 75 billion and is in talks with Saudi Arabian Oil Co (Aramco) to sell a 20% stake.
The company, however, did not mention talks with Aramco, which has reportedly hit a valuation roadblock.
The reorganization “would lead to downstream and closer to customers” and “provide sustainable and affordable energy and materials solutions to meet India’s growing needs,” the company said in the presentation.
Reliance O2C Limited is home to petroleum and petrochemical refining plants and manufacturing assets, bulk and wholesale fuel marketing, and Reliance’s 51% stake in the fuel retail joint venture with UK BP -United.
The O2C unit also houses the company’s petroleum trading and marketing subsidiaries in Singapore and the UK, Reliance Industries Uruguay Petroquimica SA.
It is also home to Reliance Ethane Pipeline Limited, which operates a pipeline between Dahej in Gujarat and Nagothane in Maharashtra, as well as the 74.9% stake Reliance owns in the joint venture with Sibur.
Its very large ethane carriers, its gas pipelines such as the one that transports coalbed methane from its CBM blocks, the offshore oil and gas asset holding company Reliance Industries (Middle East) DMCC and the Domestic exploration and production assets would not be part of the O2C. unit.
In addition, Reliance’s textile business, operated from the Naroda site, Baroda Township and land including cricket stadium, Jamnagar power assets, and Sikka Ports and Terminals Limited would also not be included. of the O2C unit.
Ambani had said in July 2019 that the process of rotating O2C to a separate subsidiary would be completed in early 2021.
Reliance owns and operates two oil refineries in Jamnagar, Gujarat, with a combined capacity of 68.2 million tonnes per year.
It is also the country’s largest petrochemical maker with units in Jamnagar, Dahej, Hazira, Nagothane, Vadodara, Patalganga, Silvassa, Barabanki and Hoshiarpur.
The company owns a 66.6% stake in the KG-D6 block where it is investing approximately USD 5 billion in the development of a second round of gas discoveries with BP.
It also owns a similar stake in the NEC-25 block in the Bay of Bengal and operates two CBM blocks in Madhya Pradesh. These upstream assets are not part of the O2C unit.
“Reliance O2C (is) one of the most integrated manufacturers of fuels, chemicals and value-added materials,” the presentation reads. “O2C to maximize downstream, reduce transportation fuels and create clean and green energy platforms.” PTI ANZ MKJ
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